How Did Adam Smith Impact Society

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Recommended: The role of Adam Smith in economics

The Impact of Adam Smith Adam Smith is known as the father of modern economics and his two-volume work called An Inquiry into the Nature and Causes of the Wealth of Nations, initiated a new foundation of economic theory that has withstood time. Long ago during Smith's time he was born into a world where mercantilism was the main economic system. Mercantilism was a system which allowed many exports but many very few imports because of the protectionist policy. This policy placed heavy tariffs on imported goods, after many countries adopted this strategy trade lessened significantly. The decrease in trade created various problems such as causing all products to rise in price, other than the most common domestic products. Furthermore, this inadequate …show more content…

Thomas Robert Malthus's research was very significant, it helped provide insight on the possible dim future with the geometrical progression of population, while the rate of food production would only be at the arithmetical progression. These ideas heavily counteracted Smith's theories because it showed a very possible catastrophic future, if the economy was to be governed by natural laws. There is also David Ricardo's iron law of wages, which said that since reproduction rates were always unsupervised labour's natural wages would stay at subsistence level. This theory was extremely effective against smith's theory of natural laws because it was highly plausible that labour wages would always be very low. In addition, Karl Marx theory of the labour theory of value was also very vital to the study of economics, because it gave provides us with knowledge on how capitalism might fail because the labourers would feel exploited for their

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